Forecasting Industry Trends
Industry leaders share lessons learned in 2019 and predict the top trends of 2020.
Bill McBride, the cofounder, president and CEO of Active Wellness
What lessons did you learn in 2019 as a health club operator? I learned there still is a lot of growth in supply and competition occurring. Other industries are entering the fitness and wellness industry with more bundled offerings that overlap a lot of what we traditionally do. I also learned we need to be involved with what is happening in retail, medicine and other lifestyle services. We need to think like retailers, not just subscription model health and fitness clubs.
What trends do you expect will be paramount in 2020 for the industry, or that you’ll be keeping an eye on? I’m still paying a lot of attention to technology solutions around fitness delivery, business analytics and consumer analytics. The “fitness — health/wellness — medicine continuum” with payor and insurance involvement is growing and becoming more prolific on
What do you think will be the biggest challenge facing club operators next year? Differentiation — what we offer and charge, and how we manage our expense load is going to be increasingly critical. Second, elevating service levels without eroding margins. Lastly, staffing with talented team members is already more challenging, and that trend will continue with our U.S. record-low unemployment rates.
Any suggestions on how to overcome those challenges? Have a very clear strategy based on who or what you are, and know what you are not. Create a culture people are excited to be part of. Really focus internally on your team and attracting team members who are of the highest caliber. This highlights the importance of having very detailed selection and hiring processes.
What’s a New Year’s resolution you’ll be making? Closing all of my Apple Fitness Rings on average for the entire year.
Debra Siena, the president of Midtown Health
What lessons did you learn in 2019 as a health club operator? How to overcome adversity. I learned it is not how hard you fall that matters, but how high you bounce. One will always be faced with difficult times. The true test of character is how you overcome it. It takes persistence, passion, teamwork and the ability to believe in yourself.
What trends do you expect will be paramount in 2020 for the industry, or that you’ll be keeping an eye on? A trend that is in full swing is big-box clubs trying to emulate the boutique experience. This will be quite the challenge for most of them. It is so much more than just converting a racquetball court or adding new equipment. It’s an entire culture shift. Everything needs to be assessed, from look and feel, to staffing, to sense of community, to ease of use. It’s paramount to get the experience right, not just the facility.
What do you think will be the biggest challenge facing club operators next year? Staying relevant. As more and more options become available to the consumer to have a workout experience at home, a club needs to stay an integral part of a member’s lifestyle to keep them coming through the front door. The club must be thought of as a member’s “third place,” where they receive more than just a workout. If the club is an integral part of a member’s way of life, it will stay pertinent. If not, you will become a disposable commodity.
Any suggestions on how to overcome those challenges? Give your members what they want when they want it. Try to create a customized experience. Listen to their feedback and learn as much as you can about an individual’s needs. Then, watch for patterns. Find out where the barriers are in a member’s experience and do your best to eliminate them.
What’s a New Year’s resolution you’ll be making? To use the club more often.
Larry Conner, the president of Stone Creek Club and Spa
What lessons did you learn in 2019 as a health club operator? Your team must always be flexible and open to new ideas, but while doing this, make sure to always protect your brand. Your brand is your business’ reputation. No matter what you are dealing with, that has to be the foundation that never moves.
We were faced with some big challenges this year and we needed immediate results to drive revenue up sharply in a short period of time. With the type of club we have — a high-end, limited enrollment club — this normally would not be possible. Once we took it all in, our team immediately put together a plan that not only resulted in what we needed, but was much more than we ever expected, while still protecting the brand. This is happening more and more in our industry — things can change quickly. When you have a strong team that is ready to move, you can handle almost anything.
What trends do you expect will be paramount in 2020 for the industry, or that you’ll be keeping an eye on? Our club’s tagline is “Your Everyday Getaway,” and that is becoming increasingly important these days. All clubs, no matter what type, need to be their members’ getaway. If not, they will go somewhere else. It is not only about that workout, it is also about making them feel welcomed and appreciated on every visit so they want to get to their club.
What do you think will be the biggest challenge facing club operators next year? Competition and regulations. Both are hitting most operators quickly. The one thing I have always focused on in my 30 years in this industry is to differentiate my club from the rest by the people in my organization. Other clubs can copy all that you do, but they cannot replicate your culture.
Also, while serving on the IHRSA Board of Directors the last four years, I have seen firsthand more laws and regulations are coming, and they usually are not in our favor. I had two bills being considered in my state which would have negatively affected club operations, and I was not even aware until the IHRSA team called me. With their help, both of these bills were taken out before going for a vote once IHRSA let the legislators know the negative affect these bills would have on clubs’ operations.
Any suggestions on how to overcome those challenges? Get involved and be part of the solution. Educate and involve yourself and your teams through industry publications, roundtables, summits, conventions, etc. Work together with other clubs to make us stronger, and join IHRSA and the ILC. Together we can protect the industry, which is vital to our country’s present and future health.
What’s a New Year’s resolution you’ll be making? Just to be the best I can be at all times. Help others, and give that little extra in everything I do.
Mark Miller, the COO of Merritt Clubs
What lessons did you learn in 2019 as a health club operator? Every year I like to think I grow and get better. However, I feel 2019 was really a learning year. Some of the insights I have from this year are as follows:
– Our industry is evolving and changing as quickly as our demographics are. Rather than fight the change, we need to embrace it — not simply adjust, but adapt and innovate. We need to view our world and industry differently. Embrace the new competition and look out for what the possibility can be.
– Being positive is key. Eliminate the negative from life — negative people, negative outlooks, negative environments, etc. It’s time we look at all with optimism and possibility.
– Finally, a reminder that limitations are within me. If I choose to see limits, I will see them. If I choose to grow, learn and get better, I will. All is within me — I just need to be all in.
What trends do you expect will be paramount in 2020 for the industry, or that you’ll be keeping an eye on? This whole trend of artificial intelligence (AI) is going to be interesting — we’ll see how it impacts things. In 2020 in Maryland, we have seen increases in minimum wage heighten competition from every sector and new ones. Everyone seems to be looking to technology to automate and save, however, our industry and clubs are built on human connections, emotions and service. It will be interesting to see how this blends to create impact.
What do you think will be the biggest challenge facing club operators next year? I think this one is two-fold. First off, it’s value creation. As an industry, how do we create value so the 80% of the world who doesn’t join clubs see it as a value add? Also, along this front is if a recession comes, the clubs that have positioned themselves as valuable will remain strong and competitive. So, as leaders, how do we create value for our members, our communities and our employees? Second is differentiation. As more and more choices emerge, it’s critical to stand out. Why should someone choose you versus the simple app, the online program or the club down the road? It’s the challenge we all face today. However, if we fix No. 1, there are more than enough fish in the sea for us all.
Any suggestions on how to overcome those challenges? Think boldly. Think differently. Act boldly. Act differently. Focus on the value, the members and the teams, and the dollars will come. Stop focusing on the numbers. I think everyone needs to think and focus differently in the New Year.
What’s a New Year’s resolution you’ll be making? To be more present and remain positive. Eliminate the negative from life. Remember, every day is a gift and be grateful.
Paula Neubert, the president and general manager of Club Greenwood
What lessons did you learn in 2019 as a health club operator? This year was one of the most challenging of my 17 years at Club Greenwood. Two of our long-time staff members passed away at the young age of 55, which was very tough on our team members. We take great pride in being a family and supporting one another, which was reinforced by how our team reacted to their passing. More than ever, we know the importance around creating a culture where a job becomes so much more. That positive culture translates into happy employees, which translates into happy members.
What trends do you expect will be paramount in 2020 for the industry, or that you’ll be keeping an eye on? Recovery will continue to grow and transform. Clubs can look to differentiate themselves from the competition by offering recovery services. The difficulty will be in determining what recovery is, if you offer recovery as a value-add or charge for it, if you create dedicated space in your club, and how you work with your spa and other therapeutic services to make all entities grow. We will be opening a Recovery Zone in January 2020.
Another trend is the growth of boutique studios. Will we find that studio growth starts stabilizing in 2020? Colorado has always been one of the top states for health club memberships per capita. Interestingly enough, we are still seeing more health clubs and studios come to Colorado. Are we all still fighting for the same pie, or has the growth of studios created a new market, and will that market even join a health club? We have a very specific population of people at Club Greenwood, but as competition increases and times change, do we need to expand our market, and how do they fit into our club culture at Greenwood?
What do you think will be the biggest challenge facing club operators next year? Increased labor expenses. Our team members are what make us special, but hiring and keeping good people is becoming increasingly difficult. Increased minimum wage laws and the competitive nature of our surrounding businesses will drive all wages up. The highest expense line in our budget is personnel. The question is, can we increase revenue annually to offset the continued increase in labor expenses?
Any suggestions on how to overcome those challenges? We hope with the ability to compensate our team members at a higher rate, we will increase our staff retention and improve upon the service we offer our members, which will then cause our members to stay longer and consider non-dues revenue. This would increase our dues and non-dues revenue lines. In addition, consider adding revenue centers that do not involve labor. Our Recovery Zone is going to be a monthly membership fee, but will not be staffed. Members will be taken through an equipment orientation, and then will operate all products and equipment on their own.
What’s a New Year’s resolution you’ll be making? Embrace change and the opportunities it can produce. Shake things up.